IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Online Merchants Guild, :

Petitioner :

:

v. : No. 179 M.D. 2021

:

C. Daniel Hassell, in his official :

capacity as Secretary of Revenue, :

Department of Revenue, :

Respondent : Argued: June 22, 2022

BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge

HONORABLE PATRICIA A. McCULLOUGH, Judge

HONORABLE ANNE E. COVEY, Judge

HONORABLE MICHAEL H. WOJCIK, Judge

HONORABLE CHRISTINE FIZZANO CANNON, Judge

HONORABLE ELLEN CEISLER, Judge

HONORABLE LORI A. DUMAS, Judge 

OPINION 

BY JUDGE CEISLER FILED: September 9, 2022

Before this Court are cross-applications for summary relief filed by C. Daniel 

Hassell, the Secretary of Revenue (Revenue), and the Online Merchants Guild 

(Guild), a trade association comprised of online businesses that sell merchandise 

through Amazon’s Fulfillment by Amazon (FBA) Program.1 The key issue before 

this Court is whether non-Pennsylvania businesses that sell merchandise through 

Amazon’s FBA Program must collect and remit Pennsylvania sales tax pursuant to 

1As described on Amazon’s website, the FBA Program is an Amazon service through 

which “businesses outsource order fulfillment to Amazon. Businesses send products to Amazon 

fulfillment centers and[,] when a customer makes a purchase, [Amazon will] pick, pack, and ship 

the order. [Amazon] can also provide customer service and process returns for those orders.” See 

https://sell.amazon.com/fulfillment-by-amazon?ld=seussoagoog-sitelink-fba2-D (last visited 

September 8, 2022).
2

Section 237(b)(1) of the Tax Reform Code of 1971 (Tax Code),

2 which provides that 

“[e]very person maintaining a place of business” in the Commonwealth of 

Pennsylvania (Commonwealth) must collect and remit Pennsylvania sales tax, or 

pay personal income tax (PIT) pursuant to Section 302(b) of the Tax Code,3 which 

imposes PIT at a rate of 3.75 % upon nonresidents for income derived “from sources 

within this Commonwealth.” 

After careful review, we hold that Revenue has failed to provide sufficient 

evidence that non-Pennsylvania businesses selling merchandise through the FBA 

Program (FBA Merchants), and whose connections to the Commonwealth were only 

shown to be limited to the storage of merchandise by Amazon in one of Amazon’s 

Pennsylvania warehouses, have sufficient contacts with the Commonwealth such 

that Revenue can mandate they collect and remit sales tax or pay PIT pursuant to 

Sections 237(b)(1) and 302(b) of the Tax Code. Accordingly, we grant the Guild’s 

cross-application for summary relief and deny the cross-application for summary 

relief filed by Revenue. 

I. Background

Before engaging in a recitation of the relevant facts in this matter, it is helpful 

to first review the legal precedent governing when a state may exercise jurisdiction 

over a nonresident business, as well as the pertinent provisions of the Tax Code. 

A. Case Law

Whether a person or entity may be liable for taxes revolves around the well

established notion that the potentially liable party must have “minimum contacts” 

with the forum jurisdiction. Wirth v. Commonwealth, 95 A.3d 822 (Pa. 2014). In 

2 Act of March 4, 1971, P.L. 6, as amended, 72 P.S. § 7237(b)(1).

3 Added by the Act of August 4, 1991, P.L. 97, 72 P.S. § 7302(b).
3

Quill Corporation, Inc. v. North Dakota, 504 U.S. 298 (1992), the United States

(U.S.) Supreme Court reviewed whether a North Dakota taxing statute 

impermissibly required an out-of-state mail-order business, which had neither retail 

outlets nor sales representatives in North Dakota, to collect and remit North Dakota’s 

use tax, in violation of Section 1 of the Fourteenth Amendment of the U.S. 

Constitution (Due Process Clause)4 and Article I, Section 8, Clause 3 of the U.S.

Constitution (Commerce Clause).

5

 Quill Corporation, Inc. (Quill), a purveyor of 

office equipment and supplies, solicited business to North Dakota residents through 

catalogs and flyers, magazine advertisements, and telephone calls. Id. at 302. The 

North Dakota taxing statute required any retailer, defined as any person engaging in 

regular or systematic solicitation of a consumer market in the state, to collect a “use 

tax” for any property purchased for storage, use, or consumption within the state. 

Id. In analyzing the constitutionality of the use tax, as applied to Quill, the U.S.

Supreme Court noted that the Due Process Clause and Commerce Clause reflected 

different constitutional concerns, and a taxing statute that comported with due 

process may nonetheless violate the Commerce Clause. Id. at 305-06. A due process 

analysis typically encompassed the concepts of notice and fair warning and looked

to “the fundamental fairness of government activity” and whether a state’s exercise 

of power over a nonresident was legitimized by the nonresident’s connections to that 

state. Id. at 312. A Commerce Clause analysis, conversely, was “informed . . . by 

structural concerns about the effects of state regulation on the national economy.” 

4 The Due Process Clause relevantly provides that no state shall “deprive any person of 

life, liberty, or property, without due process of law[.]” U.S. Const. amend. XIV, § 1. 

5 The Commerce Clause provides that “[t]he Congress shall have Power . . . [t]o regulate 

Commerce with foreign [n]ations, and among the several States, and with the Indian Tribes.” U.S. 

Const. art. I § 8, cl. 3.
4

Id. A tax would sustain against a Commerce Clause challenge where it: (1) applied 

to an activity with a substantial nexus to a taxing state; (2) was fairly apportioned; 

(3) did not discriminate against interstate commerce; and (4) was fairly related to the 

services provided by the state. Id. at 311 (citing Complete Auto Transit, Inc. v. 

Brady, 430 U.S. 274, 279 (1992)). 

As to Quill’s activities in North Dakota, the U.S. Supreme Court held that

Quill “purposely directed its activities at North Dakota residents [and] the magnitude 

of those contacts” was sufficient to withstand a due process challenge. Id. at 308. 

Regarding the Commerce Clause, however, the U.S. Supreme Court reaffirmed its 

prior determination in National Bellas Hess, Inc. v. Department of Revenue of 

Illinois, 386 U.S. 753 (1967) (overruled by South Dakota v. Wayfair, Inc., 138 S. Ct. 

2080 (2018)), that an out-of-state vendor whose only contacts with the taxing state 

were by mail or common carrier lacked the substantial nexus required. Quill, 504 

U.S. at 317. Accordingly, as Quill did not have a physical presence in North Dakota, 

the Commerce Clause shielded it from collecting and remitting the North Dakota 

use tax. Id. at 302.

In 2018, after recognizing changes in the marketplace brought about by 

internet sales, the U.S. Supreme Court explicitly overruled Quill in Wayfair, which

concerned a South Dakota act that required out-of-state sellers to collect and remit 

sales tax “as if” they had a physical presence in the state. Relying on Quill, the South 

Dakota Supreme Court had affirmed a lower court decision invaliding the act, which 

applied to sellers delivering more than $100,000 in goods or services, or engaging 

in more than 200 transactions for the sale of goods or services, into the state. 138 S. 

Ct. at 2089. The U.S. Supreme Court rejected the physical presence requirement in 

Quill as unsound, given that a business with a single salesperson located in a 
5

particular state would be required to collect and remit sales tax but a business with 

identical sales and a website accessible in every state would not. Id. at 2093. The

U.S. Supreme Court noted that the Commerce Clause was designed to prevent states 

from engaging in economic discrimination, not to relieve those engaged in interstate 

commerce from their share of a state’s tax burden. Id. at 2093-94. Quill undermined 

these precepts, as it put local, and many interstate businesses, at a competitive 

disadvantage relative to remote sellers. Id. at 2094. In the absence of Quill’s

physical presence requirement, the U.S. Supreme Court turned to the first prong of 

the test identified in Complete Auto, which simply asked whether a tax applied to an 

activity with a substantial nexus to the taxing authority. Id. at 2099. The South 

Dakota act only applied to those out-of-state sellers delivering more than $100,000 

in goods or services or engaging in 200 or more separate transactions delivering 

goods and services, a quantity of business that the U.S. Supreme Court felt “could 

not have occurred unless the seller availed itself of the substantial privilege of 

carrying on business in South Dakota.” Id. As the Wayfair respondents were large 

national companies with an extensive presence, the substantial nexus requirement in 

Complete Auto was satisfied. Id.6 

While Pennsylvania courts have not yet addressed the narrow issue of whether 

a nonresident business that stores merchandise in a Pennsylvania warehouse is 

subject to the sales tax and PIT provisions of the Tax Code, they have reviewed 

whether due process is implicated by the imposition of taxes on nonresidents. In 

Equitable Life Assurance Society of the United States v. Murphy, 621 A.2d 1078 (Pa. 

Cmwlth. 1993), this Court relevantly addressed whether a realty transfer tax imposed 

6 Because other principles that might invalidate the South Dakota act had not been litigated, 

the U.S. Supreme Court vacated the judgment of the South Dakota Supreme Court and remanded 

the matter for further proceedings. Wayfair, 138 S. Ct. at 2100.
6

by the City of Philadelphia (City) on the sale of a nonresident’s real property violated 

the Due Process and Commerce Clauses of the U.S. Constitution. We recognized 

that the “minimal connection between” the taxing authority and the person it sought 

to tax required that the taxes imposed bear a rational relationship “to the protections, 

opportunities[,] and benefits given by the taxing authority.” Id. at 1091 (internal 

citations omitted). “The simple but controlling question” concerned whether the 

taxing authority had “given anything for which it [could] ask [in] return.” Id.

(emphasis in original). Although the settlement disposing of the real property took 

place out of state, the real property itself was located in the City, which created the 

connection required to withstand a claim under the Due Process Clause. Id. at 1092. 

The realty transfer tax also survived the appellants’ Commerce Clause challenge, as 

it satisfied the test outlined in Complete Auto. Id. at 1093. The realty transfer tax 

had a substantial nexus with the City, as it only applied to transfers of real property 

located within the City’s jurisdiction. Id. at 1093. The tax was fairly apportioned,

which meant that it could not be imposed a second time by another jurisdiction and 

that it “reasonably reflect[ed] the in-state component of the activity being taxed[,]” 

because only the City, and no other locality, could tax sales of real estate located 

within its borders, and the only portion of the transaction subject to taxation was that 

which involved the transfer of City real estate. Id. The tax was deemed 

nondiscriminatory, as it applied at the same rate to both residents and nonresidents. 

Id. Finally, the tax was fairly related to the municipal services provided by the City 

to owners of real property located therein. Id. at 1093-94.

In Marshall v. Commonwealth, 41 A.3d 67 (Pa. Cmwlth. 2012), this Court 

upheld Revenue’s imposition of PIT on Robert Marshall (Marshall), a nonresident

partner of a Connecticut limited partnership (Partnership) that owned the U.S. Steel 
7

Tower, a 64-story office building, and the underlying parcel of land, located in 

Pittsburgh, Pennsylvania. Marshall challenged the PIT on several grounds, 

including due process, arguing that he lacked minimum contacts with the 

Commonwealth.

7

 Id. at 73. This Court rejected Marshall’s due process argument, 

as the Partnership’s primary purpose was ownership and maintenance of the U.S. 

Steel Tower. Id. at 74. Marshall “purposefully availed himself of the opportunity 

to invest in Pennsylvania real estate through [the Partnership,]” which provided 

sufficient minimum contacts for the imposition of PIT after the Partnership disposed 

of the property. Id. 

Our Supreme Court reached the same conclusion in Wirth, which consolidated 

an appeal from our decision in Marshall with appeals filed by other nonresident

partners of the Partnership. The Supreme Court noted that the analysis of the 

appellants’ due process claims, and whether they could be liable for PIT, considered 

whether they had minimum contacts with Pennsylvania. Id. at 837. Whether 

minimum contacts existed turned on whether the appellants could “reasonably 

anticipate being taxed upon a taxable event.” Id. The Supreme Court agreed with 

Revenue that the primary purpose of the Partnership was “to own, operate, and gain 

income from” the U.S. Steel Tower. Id. at 839. As a result, through the Partnership’s 

ownership and operation of the U.S. Steel Tower, the appellants “purposefully 

availed themselves” of Pennsylvania law, thus establishing minimum contacts 

within Pennsylvania. Id. 

B. The Tax Code

Section 202(a) of the Tax Code, 72 P.S. § 7202(a), imposes a six percent tax 

“upon each separate sale at retail of tangible personal property or services[.]” 

7 Because Marshall failed to properly develop his argument that Revenue’s action violated 

the Commerce Clause, we deemed the issue waived. Marshall, 41 A.3d at 73.
8

Pursuant to Section 237(b)(1) of the Tax Code, 72 P.S. § 7237(b)(1), Pennsylvania 

sales tax must be collected and remitted by “[e]very person maintaining a place of 

business” in the Commonwealth.8 Further, any person that is required to collect 

Pennsylvania sales tax from another person, and that fails to do so, shall be liable for 

the full amount of the tax that should have been collected. 

The Department of Revenue (Department), or its agents, is authorized by 

Section 272 of the Tax Code to “examine the books, papers[,] and records of any 

taxpayer in order to verify the accuracy and completeness of any return made or, if 

no return was made, to ascertain and assess the tax imposed by [the Tax Code].” 72 

P.S. § 7272 (emphasis added). “Taxpayer” is defined in Section 201(n) of the Tax 

Code, 72 P.S. § 7201(n), as “[a]ny person required to pay or collect the tax imposed 

by [the Tax Code.]” Section 272 further provides that the Department may “examine 

any person, under oath, concerning taxable sales or use by any taxpayer or 

concerning any other matter relating to the enforcement or administration of [the 

Tax Code], and to this end may compel the production of books, papers[,] and 

records and the attendance of all persons whether as parties or witnesses whom it 

believes to have knowledge of such matters. The procedure for such hearings or 

examinations shall be the same as that provided by The Fiscal Code[9]relating to 

inquisitorial powers of fiscal officers.” Id. The relevant provision of The Fiscal 

Code, Section 1602(a), grants the Secretary of Revenue, for the purpose of 

determining the amount of taxes owed, and the collection thereof, authority to

examine a taxpayer’s records and to compel the production of records and the 

8

“Person” includes “[a]ny natural person, association, fiduciary, partnership, 

corporation[,] or other entity[.]” Section 201(e) of the Tax Code, 72 P.S. § 7201(e). 

9 Act of April 9, 1929, P.L. 343, as amended, 72 P.S. §§ 1-1805.
9

attendance of any person, whether a party or witness, deemed necessary for the 

investigation and examination of “any public account[.]” 72 P.S. § 1602(a). Should 

a person neglect or refuse to produce the records requested by the Secretary of 

Revenue, Section 1602(c) of The Fiscal Code, 72 P.S. § 1602(c), authorizes the 

issuance of a summons “directed to the sheriff of the county in which the person” 

resides to procure the records. 

“Maintaining a place of business in this Commonwealth” is defined, in 

relevant part, as follows:

(1) Having, maintaining or using within this 

Commonwealth, either directly or through a subsidiary, 

representative or an agent, an office, distribution house, 

sales house, warehouse, service enterprise or other place 

of business; or any agent of general or restricted authority, 

or representative, irrespective of whether the place of 

business, representative or agent is located here, 

permanently or temporarily, or whether the person or 

subsidiary maintaining the place of business, 

representative or agent is authorized to do business within 

this Commonwealth.

(2) Engaging in any activity as a business within this 

Commonwealth by any person, either directly or 

through a subsidiary, representative or an agent, in 

connection with the lease, sale or delivery of tangible 

personal property or the performance of services thereon 

for use, storage or consumption or in connection with the 

sale or delivery for use of the services described in 

subclauses (11) through (18) of clause (k) of this section, 

including, but not limited to, having, maintaining or 

using any office, distribution house, sales house, 

warehouse or other place of business, any stock of goods 

or any solicitor, canvasser, salesman, representative or 

agent under its authority, at its direction or with its 

permission, regardless of whether the person or subsidiary 

is authorized to do business in this Commonwealth.

. . . .
10

(3.5)(i) Engaging in any activity as a business by any 

person, either directly or through a subsidiary, 

representative or an agent, in connection with the lease, 

sale or delivery of tangible personal property into this 

Commonwealth or the performance of services for use, 

storage[,] or consumption[,] or in connection with the sale 

or delivery for use in this Commonwealth of at least 

[$100,000] during the preceding twelve-month calendar 

period.

[10]

72 P.S. § 7201(b) (emphasis added).

Section 201 of the Tax Code contains several terms that are specifically 

germane to Internet sales,

11 as follows:

(hhh) “Forum.” A place where sales at retail occur, 

whether physical or electronic. The term includes a store, 

a booth, an Internet website, a catalog[,] or similar place.

(iii) “Marketplace facilitator.” A person that facilitates the 

sale at retail of tangible personal property. For purposes 

of this article, a person facilitates a sale at retail if the 

person or an affiliated person:

(1) lists or advertises tangible personal property for 

sale at retail in any forum; and 

(2) either directly or indirectly through agreements 

or arrangements with third parties, collects the 

payment from the purchaser and transmits the 

payment to the person selling the property.

The term includes a person that may also be a vendor.

(jjj) “Marketplace seller.” A person that has an agreement 

with a marketplace facilitator to facilitates sales for that 

person.

10 Section 201(b)(3.5)(i) of the Tax Code was added by the Act of June 28, 2019, P.L. 50, 

No. 13 (Act 13), 72 P.S. § 7201(b)(3.5)(i). 

11 Added by Section 1 of Act 13. 
11

72 P.S. § 7201(hhh), (iii), and (jjj).

Section 237(b.1) of the Tax Code provides that a marketplace facilitator 

maintaining a place of business in the Commonwealth must collect and remit 

Pennsylvania sales tax on all sales, leases, and deliveries of tangible personal 

property by marketplace sellers whose sales are facilitated through the marketplace 

facilitator’s forum.12 

C. Factual Background

Turning to the instant matter, in an agreement executed between Amazon and 

Revenue on January 30, 2012 (2012 Agreement), Amazon agreed to voluntarily 

collect and remit Pennsylvania sales tax on its internet sales. Deposition of Kevin 

Milligan,13 3/23/22, at 63; Guild’s Br., Ex. 4. The 2012 Agreement focused on the 

collection of sales tax for goods owned and sold by Amazon. Milligan dep. at 71. 

In 2017, Revenue began developing a strategy for collecting sales tax from FBA 

Merchants that had a physical presence in the Commonwealth. Id. at 80-82. This 

strategy coincided with the enactment of the Act of October 30, 2017, P.L. 672 (No. 

43), which added provisions to the Tax Code addressing the collection of sales tax 

for online sales. Id. at 126, 145. Shortly thereafter, Amazon and Revenue entered 

into a second agreement whereby, effective April 1, 2018, Amazon would collect 

and remit Pennsylvania sales tax on FBA sales (2018 Agreement). Id. at 157. The 

2018 Agreement also provided that Amazon would not be liable for any sales tax 

12 72 P.S. § 7237(b.1).

13 Milligan is the special advisor to Revenue’s deputy secretary of taxation. Milligan dep., 

3/23/22, at 9.
12

owed for FBA sales made prior to April 1, 2018.14 Id. at 161, 171. FBA Merchants, 

who were not parties to the 2018 Agreement, remained obligated to pay any

outstanding sales tax for pre-April 1, 2018 FBA sales and for any FBA sales made 

after that date “if Amazon messed up” and failed to collect sales tax. Id. at 207. 

On June 2, 2021, the Guild filed a petition for review (PFR) with this Court 

after its members received a Business Activities Questionnaire Request (Business 

Activities Request)15 from Revenue indicating that they “may have” a physical 

presence in Pennsylvania that would require the collection and remittance of 

Pennsylvania sales tax and the payment of PIT. Stipulation ¶ 1(a). The Business 

Activities Request noted that, under the Tax Code, storing property, including 

inventory, at a distribution or fulfillment center, or at any other location within 

Pennsylvania, constituted a physical presence that created tax obligations, such as 

income and sales tax, that must be reported and remitted as of the date the property 

was first located within Pennsylvania. Emergency Relief Application, Ex. 1. 

14 During this same time period, the Commonwealth Department of Community and 

Economic Development issued its response to a request for proposal (RFP) issued by Amazon for 

the location of a second Amazon headquarters, offering Amazon up to $4.6 billion in financial 

assistance should it choose Pennsylvania as the site for its new headquarters. See 

https://s3.documentcloud.org/documents/5113274/Letter-SecretaryDavin-AmazonHQ2-RFP1.pdf (last viewed September 8, 2022). On November 13, 2018, Amazon selected New York City, 

New York, and Arlington, Virginia, as the destinations for its new headquarters. See 

https://www.usatoday.com/story/tech/science/2018/09/12/timeline-amazons-search-hq-2-itssecond-headquarters/1273275002/ (last viewed September 8, 2022). Amazon later abandoned 

plans to locate a headquarters in New York City. 

https://www.nytimes.com/2019/02/14/nyregion/amazon-hq2-queens.html (last viewed September 

8, 2022).

15 The declaration of Suzanne Tarlini, Director of Revenue’s Bureau of Registration and 

Taxpayer Management, indicates that, as of March 23, 2021, Revenue mailed 11,263 Business 

Activities Requests to nonresident businesses believed to have a nexus with the Commonwealth. 

Guild’s Br., Ex. 7; Revenue’s Br., Ex. G. 
13

Recipients of the Business Activities Request were offered the opportunity to 

participate in a voluntary compliance program (Compliance Program) that would 

assist them in complying with any past due tax obligations and that offered a limited 

lookback period that would relieve them of tax obligations accruing prior to January 

1, 2019. Id. Businesses interested in participating were directed to complete and 

return a questionnaire to Revenue within 15 days of the Business Activities

Request’s date, which Revenue would thereafter review for purposes of determining 

the businesses’ tax obligations. Id. Businesses deemed subject to Pennsylvania sales 

and income tax would be registered as such and notified of their tax collection and 

filing obligations. Id. The Business Activities Request further indicated that 

“[f]ailure to provide the information requested [would] result in additional 

enforcement actions and the business [would] forfeit any penalty relief or limited 

lookback provisions provided by the [Compliance Program].” Id. (emphasis added). 

On June 3, 2021, the Guild filed an application for emergency relief, seeking 

a stay of Revenue’s June 8, 2021 deadline for complying with the Business Activities

Request. Then-President Judge Brobson denied the application as moot after 

Revenue agreed to extend the deadline to June 22, 2021.16 Following a June 9, 2021 

status conference, the parties agreed to file cross-applications for summary relief, 

along with supporting briefs. Revenue’s compliance deadline was extended pending

this Court’s disposition of their cross-applications for summary relief. June 30, 2021 

Stipulation, ¶ 5. 

Prior to initiating the instant action, on February 26, 2021, the Guild filed a 

complaint for declaratory and injunctive relief with the United States District Court 

for the Middle District of Pennsylvania (District Court), arguing that Revenue’s 

16 The June 8, 2021 extension was itself an extension of the original May 8, 2021 deadline 

agreed to by the parties. Emergency Relief Application, Ex. 5.
14

attempts to collect Pennsylvania sales tax from the Guild’s members violated their 

constitutional rights. June 30, 2021 Stipulation, ¶ 1.17 As part of the District Court 

action, Scott Moody (Moody), a Guild member and nonresident FBA Merchant, 

testified that he began selling merchandise through the FBA Program in September 

2018. Emergency Relief Application, Ex. 2, Notes of Testimony (N.T.), 4/29/21, at 

9, 13, 48. Moody related that, in addition to conducting its own first-party online 

sales, Amazon permits third-party merchant sales that are fulfilled directly by the 

merchant. Id. at 14. Conversely, FBA sales are, as the name suggests, fulfilled 

entirely by Amazon, which collects payment from the customer and ships the 

merchandise directly from an Amazon warehouse. Id. at 23. To participate in the 

FBA Program, an FBA Merchant submits a list of its inventory to Amazon, which 

is then shipped to a location designated by Amazon. Id. at 24. An FBA Merchant

cannot select the warehouse to which its merchandise will be shipped, unless it pays 

a fee to participate in an “inventory placement service” that enables the FBA 

Merchant to direct its shipments to certain locations. Id. at 26, 37. This service only 

governs the initial shipment of merchandise to Amazon, as the FBA Merchant

retains “no further control” over merchandise received by Amazon, unless the FBA 

Merchant elects to withdraw its products from sale on Amazon. Id. at 26. Following 

the sale of its merchandise through the FBA Program, an FBA Merchant receives

payment from Amazon, minus funds withheld “to cover potential refunds.” Id. at 

24. FBA Merchants have no contact with the customers that purchase their 

merchandise. Id. at 36. 

17 The District Court ultimately dismissed the Guild’s complaint, as it concerned an 

unsettled matter of Pennsylvania law. June 30, 2021 Stipulation, ¶ 1; Emergency Relief 

Application, Ex. 4. 
15

Moody testified that he received a Business Activities Request from Revenue 

in early 2021 indicating that his business may be subject to Pennsylvania sales and 

income tax due to the storage of merchandise in one of Amazon’s Pennsylvania 

warehouses. Id. at 40; Emergency Relief Application, Ex. 1. Moody stated that he 

could not verify his business activity in Pennsylvania because he could not identify 

how much of his FBA inventory was stored there. N.T., 4/29/21, at 40, 47. He 

believed that Amazon collected sales tax on FBA sales when he initially began 

participating in the FBA Program in 2018. Id. at 44. Moody conceded during crossexamination that the FBA agreement he executed with Amazon provides that he is 

responsible for collecting, reporting, and paying any taxes that Amazon has not 

collected and remitted on his behalf. Id. at 50. Moody also acknowledged that he 

owns the merchandise offered through the FBA Program until a customer pays for 

it. Id. at 53. He agreed that he had neither received any tax assessments from 

Revenue, nor had he been contacted by Revenue’s criminal tax section or its Bureau 

of Audits. Id. at 57-58. 

Following the submission of briefs in support of the parties’ crossapplications for summary relief and oral argument, which took place on June 22, 

2022, this matter is now ready for our disposition.

II. Issues

The primary issue before this Court is whether FBA Merchants are subject to 

the sales tax and PIT provisions of the Tax Code because Amazon stored their 

merchandise in warehouses located in the Commonwealth.

18

 Additionally, the Guild 

argues that Revenue lacks the authority to collect sales tax in a retroactive manner, 

that the relevant provisions of the Tax Code do not apply to the Guild’s nonresident 

18 We have reordered the issues so that we may first address the Guild’s constitutional 

claims.
16

members, and that Revenue’s enforcement efforts violate the federal Internet Tax 

Freedom Act (ITFA).

19

III. Discussion

An application for summary relief is evaluated according to the standards for 

summary judgment. Myers v. Com., 128 A.3d 846, 849 (Pa. Cmwlth. 2015). An 

application for summary relief may be granted if a party’s right to judgment is clear 

and no issues of material fact are in dispute. Id. To be entitled to summary relief, 

the parties must demonstrate the nonexistence of any genuine issue of material fact. 

Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, (Pa. 1979). 

First, we address whether imposition of the sales tax collection and remittance 

provisions in Section 237(b)(1) of the Tax Code on nonresident FBA Merchants

implicates the Due Process Clause of the U.S. Constitution. A taxpayer challenging 

the constitutionality of tax legislation bears a heavy burden. Leonard v. Thornburgh, 

489 A.2d 1349, 1351 (Pa. 1985). Tax legislation is presumed to be constitutionally 

valid and will only be declared unconstitutional where it “clearly, palpably, and 

plainly violates the Constitution.” Free Speech, LLC v. City of Phila., 884 A.2d 966, 

971 (Pa. Cmwlth. 2005). Any doubts regarding the constitutionality of tax 

legislation should be resolved in favor of upholding the legislation. Id. 

As already discussed herein, the Due Process Clause protects citizens from 

unfair tax burdens by limiting the power of states and their political subdivisions to 

impose extra-territorial taxation. Equitable Life, 621 A.2d at 1091 (internal citations 

omitted). To comply with due process, such taxation is restricted to cases in which 

there exists “some definitive link, some minimal connection, between the state and 

19 Pub. L. No. 105-277, Div. C. Title XI, §§ 1100-1104, 112 Stat. 2681 (1998) (current 

version at 47 U.S.C. § 151 note). The ITFA generally prohibits the imposition of any 

discriminatory tax on electronic commerce.
17

the person, property[,] or transaction it seeks to tax[.]” Id. The existence of 

minimum contacts requires “some act” by which an entity “purposefully avails itself 

of the privilege of conducting activities within the forum [s]tate, thus invoking the 

benefits and protections of its laws.” Wirth, 95 A.3d at 838 (quoting Hanson v. 

Denckla, 357 U.S. 235, 253 (1958)). The existence of such a link turns upon the 

individual facts of each case. L.L. Bean, Inc. v. Com., 516 A.2d 820, 824 (Pa. 

Cmwlth. 1986). The placement of goods into the stream of commerce with an 

expectation that they will be purchased by a state’s consumers may indicate 

purposeful availment; however, “as a general rule, it is not enough that the defendant 

might have predicted that its goods will reach the forum [s]tate.” J. McIntyre Mach., 

Ltd. v. Nicastro, 564 U.S. 873, 882 (2011). As we noted in Equitable Life, “[t]he 

simple but controlling question is whether the taxing authority has given anything

for which it [could] ask [in] return.” Equitable Life, 621 A.2d at 1091 (emphasis in 

original). 

The Guild argues that Revenue cannot establish sufficient minimum contacts 

exist that would bring the FBA Merchants within Revenue’s jurisdictional reach. 

Amazon, not the FBA Merchants, controls the storage and shipment of goods in the 

FBA Program, and an FBA Merchant’s mere participation in the FBA Program does 

not create meaningful contacts with the Commonwealth. At most, the Guild argues, 

it creates the possibility that Amazon would “unilaterally decide to store goods in 

Pennsylvania, as opposed to” a facility located in another state. Guild’s Br. at 21. 

Revenue concedes that a state must have personal jurisdiction over a 

nonresident business before it can require the payment of taxes. It argues, however, 

that the Business Activities Request sent to FBA Merchants is not a demand for tax 

payments. Rather, it is a “demand for information concerning potential tax liability,”
18

which Revenue has the authority to seek under Section 272 of the Tax Code. 

Revenue’s Br. at 16. Revenue denies that the Compliance Program violates an FBA 

Merchant’s due process rights, as any FBA Merchant declining to participate will 

receive notice of any adverse decision made by Revenue and the opportunity to 

appeal that decision. Revenue further contends that the Guild’s due process claim 

is premature because no FBA Merchants have received a tax assessment from 

Revenue. Conversely, Revenue asserts that the FBA Merchants may not press a 

federal due process claim because they have not first taken advantage of any 

available administrative processes. Moreover, Revenue suggests that, by 

participating in the FBA Program, the FBA Merchants should have reasonably 

anticipated that they would incur tax liability in the Commonwealth.

While it appears that Revenue has not issued a tax assessment against any of 

the FBA Merchants, we do not agree that the Business Activities Request mailed by 

Revenue is merely a “demand for information.” Rather, the Business Activities 

Request indicates that “[f]ailure to provide the information requested will result in 

additional enforcement actions,” language that clearly suggests the existence of 

pending enforcement actions. Emergency Relief Application, Ex. 1 (emphasis 

added). We likewise reject Revenue’s argument that the Guild’s due process claim 

is premature, as it is not clear what, if any, administrative processes are available to 

the FBA Merchants, beyond their strict compliance with the dictates of the Business 

Activities Request. Moreover, the administrative process identified by Revenue, 

notice and the opportunity to appeal an adverse tax assessment, would be available 

only following a determination of tax liability. Essentially, if we correctly follow 

Revenue’s reasoning, FBA Merchants, simply by virtue of having enrolled in the 

FBA Program, have placed themselves within Revenue’s jurisdiction and thus have 
19

no means to challenge Revenue’s authority to investigate their records and determine 

their tax liability until after Revenue has investigated their records and determined 

their tax liability. This circuitous line of reasoning is unsupported by the statutory 

framework and controlling jurisprudence.

Critically, Revenue’s investigative powers under Section 272 apply to the 

records of taxpayers, not individuals or entities Revenue suspects may be taxpayers. 

Furthermore, Section 272 does not grant Revenue the unfettered authority to seek 

business information from any person or entity it desires for the purpose of 

determining its status as a taxpayer. Due process requires a connection between the 

taxing authority and the person or entity it seeks to tax and “some act” indicating the 

alleged taxpayer has availed itself of the taxing authority’s protections, 

opportunities, and services. Wirth, 95 A.3d at 838. 

The record reflects that Amazon determines the location to which goods are 

shipped by an FBA Merchant. Even where an FBA Merchant has paid to participate 

in Amazon’s “inventory placement service,” an FBA Merchant has no control over 

its merchandise once Amazon receives it. Therefore, while an FBA Merchant may 

initially ship its merchandise to a Pennsylvania warehouse owned and operated by 

Amazon, whether the merchandise remains in that location is a decision made solely 

by Amazon. Once the merchandise is purchased by an Amazon customer, Amazon 

is responsible for shipping it to the customer. The identity and location of the 

purchaser is not disclosed to the FBA Merchant. Milligan, Revenue’s special 

advisor to the deputy secretary for taxation, acknowledged during his deposition that 

FBA sales are made through Amazon’s website, that Amazon collects payment for 

the purchased goods, and that Amazon is responsible for shipping the merchandise 

to the customer in an Amazon-branded box. Milligan Dep. at 136-37. We are hard 
20

pressed to envision how, in these circumstances, an FBA Merchant has placed its 

merchandise in the stream of commerce with the expectation that it would be 

purchased by a customer located in the Commonwealth, or has availed itself of the 

Commonwealth’s protections, opportunities, and services.

Regarding the imposition of PIT, the parties only briefly touch upon this issue 

in their respective principal and reply briefs. Revenue’s argument, however, that 

FBA Merchants “may have outstanding [PIT] obligations” appears to be based on 

the same faulty proposition that, because Amazon may have stored an FBA 

Merchant’s property in one of its Pennsylvania warehouses, an FBA Merchant has 

income sourced from within the Commonwealth. Without more, Revenue’s 

argument must fail, as Revenue’s power to examine a taxpayer’s records under 

Section 272 of the Tax Code does not extend to demanding business information 

from every participant in Amazon’s FBA Program, simply because Revenue 

suspects that person or entity “may be in violation of Pennsylvania’s tax laws[.]” 

Revenue’s Br. at 18. This Court came to a similar conclusion in Bloomingdale’s By

Mail, Ltd. v. Department of Revenue, 516 A.2d 827 (Pa. Cmwlth. 1986), and L.L.

Bean.

20

 

In both Bloomingdale’s and L.L. Bean, the Department sought transactional 

sales data from nonresident mail order companies, Bloomingdale’s By Mail, Ltd. 

(BBM) and L.L.Bean, Inc. (L.L. Bean). The Department also sought to compel the 

collection and remittance of Pennsylvania sales tax. In the case of L.L. Bean, its

products were sold by V.F. Corporation (V.F.), an unrelated Pennsylvania 

corporation that owned and operated retail stores in the Commonwealth. L.L. Bean,

20 While our decisions in Bloomingdale’s and L.L. Bean were decided prior to Wayfair, the 

Wayfair decision only impacted the analysis of Commerce Clause claims. Our review in 

Bloomingdale’s and L.L. Bean involved a due process analysis, which was unaffected by Wayfair. 
21

516 A.2d at 823. The Department argued that V.F. was L.L. Bean’s “representative” 

for purposes of Section 201(b)(2) of the Tax Code,

21 and, therefore, L.L. Bean 

maintained a place of business in the Commonwealth. This Court rejected the 

Department’s argument that V.F. acted as L.L. Bean’s representative, as L.L. Bean 

exerted no control over V.F., V.F.’s operation of its stores, or V.F.’s employees. Id. 

at 823. V.F. set the prices for merchandise sold at its stores, which used V.F.-

branded shopping bags. Id. L.L. Bean’s contacts with V.F. were limited to 

protecting L.L. Bean’s trademark, providing advice on how to display L.L. Bean’s 

goods and improve V.F.’s sales, and confirming the accuracy of L.L. Bean’s record 

keeping. Id. at 823, 825. We also rejected the Department’s argument that Section 

272 of the Tax Code granted the Department authority to compel L.L. Bean’s release 

of its transaction sales data for the purpose of collecting Pennsylvania sales tax from 

L.L. Bean’s customers. Id. at 826. Section 272 of the Tax Code specifies that The 

Fiscal Code governs the procedure for investigating and examining a taxpayer’s 

records. To that end, Section 1602(c) of The Fiscal Code, 72 P.S. § 1602(c), 

authorizes the issuance of a summons directed “to the sheriff of the county in which 

the person or persons reside[.]” We construed this provision as limiting the 

Department’s investigative power to in-state residents, a construction bolstered by 

Section 273 of the Tax Code, which requires that common carriers delivering goods 

by a nonresident shipped to the Commonwealth “maintain adequate records of such 

deliveries[.]” 72 P.S. § 7273; L.L. Bean, 516 A.2d at 826. We reasoned that Section 

273 would be rendered superfluous if the General Assembly intended that Section 

272 of the Tax Code apply to nonresidents. Therefore, we held that Section 272 did 

21

 The 2019 amendments to the definition of “maintaining a place of business in this 

Commonwealth” do not affect this Court’s analysis of L.L. Bean.
22

not grant the Department broad power to obtain the records of a nonresident. L.L. 

Bean, 516 A.2d at 826. 

The sole issue in Bloomingdale’s concerned whether the Department had 

authority under Section 272 of the Tax Code to compel the attendance of out-of-state 

witnesses and the production of out-of-state documents. Relying on L.L. Bean, we 

held that the Department’s subpoena power under Section 272 of the Tax Code could 

only be utilized “within the borders of the Commonwealth.” Bloomingdale’s, 516 

A.2d at 829. 

To paraphrase the question we posed in Equitable Life, the record fails to 

disclose what, if anything, the Commonwealth has given the FBA Merchants “for 

which it can ask [in] return.” Equitable Life, 621 A.2d at 1091. Furthermore, 

Revenue’s investigative powers under Section 272 may not be utilized against 

persons or records located outside the Commonwealth. Accordingly, we grant the 

Guild’s cross-application for summary relief.

22

 Revenue’s cross-application for 

summary relief is denied. 

__________________________________

ELLEN CEISLER, Judge

22 In light of our disposition of the Guild’s due process claim, we need not address its

remaining arguments.
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Online Merchants Guild, :

Petitioner :

:

v. : No. 179 M.D. 2021

:

C. Daniel Hassell, in his official :

capacity as Secretary of Revenue, :

Department of Revenue, :

Respondent :

O R D E R

AND NOW, this 9

th day of September, 2022, the cross-application for 

summary relief filed by the Online Merchants Guild is hereby GRANTED. The 

cross-application for summary relief filed by C. Daniel Hassell is DENIED. 

__________________________________

ELLEN CEISLER, Judge